"Emancipation from the
bondage of the soil is no freedom for the tree."
—Rabindranath Tagore
(Indian, 1861-1941)
Word for the day
Carte blanch (n)
Unconditional authority;
full discretionary power:
Malice towards none
Legalizing the widespread
overloading practice by truckers has not helped much. They still went on
strike.
Do you read a conspiracy
here?
First random thought this morning
GST council has announced another round of rate rationalization. With
this round, now only 35 items are left in the 28% slab. Most of these items are
for use by upper middle class and rich like air conditioners, cars etc. This is
significant, as just one year ago, we started with over 220 items in 28% slab.
At this rate, we may move to 18% maximum slab in 2-3years.
Is it natural progression or Rahul Gandhi is setting the agenda
and government is just complying?
Doubling farmers' income
Doubling farmers' income by 2022 and ensuring a minimum of 50%
profit to farmers are two of the most prominent electoral promises made by the
incumbent government.
The government has apparently taken many steps to fulfill its
promises, viz., farm loan waivers, better availability of Urea, soil health
check to optimize the use of fertilizers and enhance productivity, better crop
insurance coverage, sharp increase in government support prices for various
major crops, higher budget for irrigation etc.
A recent visit to the rural areas of UP, MP, and Rajasthan however
suggested that farmers find the steps taken by the government inadequate. Many
social organizations working for the welfare of farmers have also highlighted
numerous lacunae in the government endeavor. The former prime minister Dr.
Manmohan Singh recently echoed this sentiments and highlighted that the aim of
doubling farm income by 2022 may not be attained.
I believe that a part of the criticism of the government efforts
(both quantum and direction) may be purely political and undue. However, it is
important to note that farmer distress is a genuine problem and they are
finding government's effort lacking both in quantum and direction.
I have been repeatedly highlighting the problems faced by Indian
farmers and some solutions for making structural changes in the Indian agri
sector.
I would like to reiterate some of the earlier discussions. But
before that it would be useful to note the following:
(a) As per NSSO 2013 data
85% of Indian cultivators own less than one hectare land. Another 15% own land
measuring between one and four hectares. Only 0.24% farmers owned more than ten
hectares of land. The average land holding for all farmers is 0.9 hectares.
(b) There is huge variation in land holding pattern amongst states. For example, AP and TN have largest proportion of landless farmers (more than 50%): Bihar and West Bengal have largest number of marginal farmers (close to 60%), where Rajasthan has the largest share of large farmers. Same agri policy for all these states is bound to fail. About two third of all rural households have farming as their principle source of income.
(c) As per last NSSO
survey data, the average monthly rural household income in India is about
Rs6426 and average Monthly rural household expenses are about Rs6223. About 85%
of households earn less than their expenses. About half of this income comes
from cultivation and rest from other activities like labour and animal
husbandry.
(e) Rural household spend about half their income to buy food.
(f) As per the last
available NSSO data, the average per student annual expense for education in
rural areas was Rs6788 in 2014. It had risen more than 2.5x since 2008 when it
was recorded at Rs2461.
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(g) The average
hospitalization expense in rural areas is close to Rs17000 per case of
hospitalization as per the last available NSSO data
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(h) Doubling the farmers'
income by 2x in 8years (2014-2022) means a nominal growth rate of 9% CAGR.
There is little change in real rural wages over past four years, and last year
the real wage growth was negative. Considering that rural wages are an
important component of rural income and a key determinant of minimum support
price for farm produce, the government might need to review its strategy.
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To bring any meaningful improvement in the dismal condition of India's farming community, a comprehensive rural development effort is needed. Any piecemeal solution like occasional loan waiver shall have almost no sustainable impact. The traditional farmer welfare measures like periodic hikes in support prices for certain crops, farm input subsidies, interest rate subvention have not yielded the desired results.
In my view, a sustainable improvement in Indian farmers'
conditions is possible only under a comprehensive rural development mission.
The mission should address the problem with structural reforms at three levels,
viz., 1. Farm Level; 2. Policy Level and 3. Social Level. All reforms need to
be pursued urgently, vigorously, simultaneously and in a fully integrated
fashion, for having a meaningfully sustainable impact.
...to continue tomorrow
